Transcripts For CNBC Squawk 20240703

Open. Plus signs of a resilient consumer. Amex beats expectations, record revenue for the sixth straight quarter. And transports continue to be in focus. Theyre on pace for what would be the fifth straight weekly loss for that group. Csx reporting a mixed quarter on weaker rail demand. Knight swift saying freight demand remains steady. Lets get to that tenyear hitting 5 , as we said, late yesterday. This is what the chair had to say about bonds and rates. Are we seeing the longer run bonds . Increases in rates . Are we seeing those come through in Financial Conditions in a persistent way, and i think if you look at Financial Condition indexes, the answer, so far, would be yes, you are. Persistence, it will be a matter of just seeing whether or not but certainly, if you look at Financial Conditions indexes, theyre showing tightening, and its a lot because of longer rates. He did say a few months of disinflationary data is just the beginning, sara, of whats going to be needed. What did you think of his discussion of term premium . Well, he mentioned it. My takeaway on powell was, for the doves, they got what they wanted. He didnt make a strong or forceful case for raising rates again this year. But he did leave the door open for it. For the hawks, he didnt manage to cap longterm bond yields. Tlfls a there was a little bit of both, but i think overall the message was hes content to wait and see like some of his colleagues on the fed are, but david did mention if the data continued to come in strong, theyre resolute on inflation. Theyre proceeding carefully, but they would do whats necessary, i. E. , have to tighten further if so warranted. I think its interesting with the overall takeaway in the probability of fed hikes, december came down after the fed chair. So, the whole wait and see message, i think, resonated more with the market, but interestingly, then the tenyear yield went up past 5 . So, is it fed driven or other longterm factors at work here like deteriorating fiscal issues, potentially higher inflationary pictures . The really interesting thing thats happening beyond the long yields going higher is the uninversion of the yield curve and its kind of happening for the wrong reason. Usually, the yield curve uninverts as the market gets more confident about the longer term outlook for the economy. They sell the shortterm rates. But thats not whats happening. Its not a bull steepener. Its a bear steepener. Its the higher for longer, basically, getting seeped into the markets mind. You showed us some of the data yesterday in terms of chinese purchases or lack thereof, of u. S. Treasurys. Weve talked about it, when you talk about the fiscal side of it, the fact that we have to continue the issue of rate deal of supply for this year and well into next year and what thats doing. Theres an argument to be made there. Others will say, its just technical. Not quite sure what that means. A lot of Market Participants like to tell you its technical or its positioning. The other thing thats happening is qt is in full force. Theyre drawing down the balance sheet, a trillion dollars down. Its still 8 trillion, so its still a high balance sheet, but that also puts pressure on longterm rates. I think whats most remarkable, david, about this move that were seeing, the selloff in bonds, is its happening during this geopolitical situation where gold is now at the highest level in a few months, where theres evidence of a dash for safety, where oil prices are elevated, and yet, bonds are not acting. Well, they did in a few days after the initial massacres, and then they didnt. And then they reverted back to sort of what we had been seeing, which was the enormous move up in yield, down in price. Theyre just not reacting to a fed chair that seems content to proceed cautiously. Hes saying the same thing hes opiniobeen saying, sara. But the odds of december went from 45 to 20 , which is not a big deal, because they werent above 50 . What im saying is that normally you would see some buying of bonds on that kind of message. What about bostic this morning . I know hes a nonvoting member but i like listening to him. Hes talking a lot of businesses who are preparing for tougher times. Hes always been sort of attuned to the caution thats out there in the marketplace, and we hear it, and we see it in the earnings reports all the time. Didnt get it from amex today. No, that was one of the hallmarks of yesterday was sort of a degradation in the quality of the at least the early batch of earnings that we had gotten late last week and earlier this week, but yeah, bostic said, cant imagine rate cuts in the first half of next year, maybe late 24. Higher for longer or high for longer. I think he doesnt want to raise Interest Rates, and this has been his message, that theres more to lose by breaking what theyve got. They have got the soft landing. They do. Inflation went from just under 9 to where we are right now, under 4 , and we havent gone into recession, and the economy looks decent, and jobs are not wrecked. But can they be satisfied . No, because theyre not at their target yet, and chair powell indicated that they need to they probably would like to see more economic weakness so they have more confidence that inflation will come down. Right, but that, i guess, hawkish, bullish aspect is one reason we havent strayed from 4,300. Wells is out today, despite this week, elevated geopolitical uncertainty, jobless claims came in sub200,000, and as a result, we do not see much downside to our target range of 4,200 to 4,600. Theyre still at 4,420 for yearend. You either are bullish because youre looking at the economy and earnings, or youre bearish because youre looking at treasury yields, and theres a big split in the market. Barclays equity strategist put out an interesting note today. They looked at the last 25 years and looked at the relative pes to bond yields and actually said its not as sharp of a correlation. In other words, they dont think, necessarily, equities are going to fall because of this move up in real yields. However, a lot of other people do and thats certainly what we have been seeing in the market. As bob pisani said, hard to get some stabilization in the stock market without stabilization in Interest Rates. Well, meanwhile, we said amex, and the numbers were quite strong. Cited them at the top of the broadcast. Card member spending up 7 year over year. Thats adjusting for foreign exchange. Strongest in the u. S. Consumer segment, up 9 . Thats a sign, isnt it, sara . Its a sign of a high end. I mean, amex does cater to the high end. They do, they do. But they always mention the growth that they see in the younger generations, gen z and millennial customers. Steve squary also pointed out that has been very strong growth. They are exposed to restaurants and travel, and thats where americans are spending and Global Consumers are spending and prioritizing right now. They rown resy. Its a great app. You cant go anywhere without it. Steve says our card base is a really small piece of the u. S. Economy and one of the reason we have such great metrics is because we have really highquality card member and at this point in time, they have not been impacted by anything. Net writeoff and delinquency rates are below prepandemic levels. They are setting aside provisions for credit losses as we have been seeing across the financial space. 1. 23 billion, so up sharply from last year, i think 60 or so, but they dont see any reason, necessarily, for caution yet, but you have to prepare for the eventual likelihood. Stocks not doing anything. Small business up two. Probably the weakest part of the silos they watch. While were on financials, well want to watch regions today. Its going to open down 8 . This was a miss, a miss on net interest income, a miss on net interest margin. Efficiency ratio was weak. They cut the guide. Provisions ran a bit hot. Nothing went well for this quarter. Right, but again, its not the allout concerns that we had during the Regional Bank scare. Its just its bank by bank now. Its, how are you doing on deposits . Some of them are up, and some of them are down. How are you doing on provisions versus miss, and then the net interest income. But these are all sort of factors as the banks are working through a trickier environment, but theyre not even fifth third, who was on with us, is a little more cautious about the soft landing story and still not talking about any kind of major stress from consumers or recessionary indications. Just not getting it. Yeah. I thought one of the more interesting calls today was out of bank of america, hartnett has been bearish for a long time but did say that investors are sufficiently bearish now for the tenyear to hit a ceiling, keep a ceiling of about 5 and for s p to basically hold at 4,200. He argues if it cant hold 4,200, that is indicative of an imminent credit event or hard landing, in his view, which is interesting. This is the resilience that weve seen in this range. Whats a credit event . Its a bad thing. By the way, watch high yields. So glad youre here to help me. Have you been watching high yield . Yes. Theres some weakness there. Check out the hyg, the highyield etf. Its showing weakness and thats also sort of a precursor to stress in the economy and the markets. Were going to pull it up here, but thats something i know people are watching because it had been cooperating for a while, as weve gotten this sort of soft landing story, but look at whats happened just in the recent weeks or so. Ticked down. Thats something to watch. Lets move on to president bidens primetime address after his return from the middle east. Last night at the oval office, he delivered a 100 billion message to congress, mostly regarding funding for israel as well as ukraine. Im going to send to congress an urgent budget request to fund Americas National security needs, to support our critical partners, including israel and ukraine. Its a smart investment thats going to pay dividends for American Security for generations. Help us keep american troops out of harms way, help us build a world that is safer, more peaceful, more prosperous for our children and grandchildren. Lets get the latest on the israelhamas war and for that, well go to nbc news correspondent jay gray in tel aviv. Jay . Hey there, david. It seems to be a waiting game to see which will enter first, humanitarian aid into gaza or israeli tanks. I can tell you right now that the aid is going nowhere at this point. We expected at least 20 truckloads of food, water, and medicine to cross the rafah Border Crossing with egypt into gaza today, but it has not happened because, according to those on the ground, it is too volatile. We know theyre continuing to repair roadways in the area that have been damaged by israeli fighter strikes. They are continuing to prepare for this move, though the u. N. Has said, pointblank, 20 truckloads, a great start. We need 100 truckloads a day to satisfy the need of 2 million or more who are trapped in gaza right now, many of them with nowhere to go. The buildup of Israeli Defense forces along the border to the area where they intend to go in has intense foified. We see more equipment, more tanks, and what we have heard from the Israeli Defense forces is that the pace of attacks from the air is unlike anything theyve seen in decades, so they seem to be clearing a path right now. We have also been told that there have been contained raids by idf teams along the fencing with gaza, and that area they consider a war zone. Theyve also said that they believe there are still hamas operatives on the israeli side of that fence. Thats something they continue to explore as well. All of that framed by the idea that protesters are continuing to pour into the streets across the region, frustration, tension, and concern growing right now. Back to you. Jay, you mentioned the southern border, but theres also tension, obviously, at the northern border with lebanon. My understanding is an israeli town nearby has been cleared. What can you tell us in terms of what were seeing there . Yeah, no question that thats wrapped up ramped up significantly over the last several days. Weve seen several volleys back and forth between Israeli Forces and hezbollah soldiers, fighters, on that side. And so thats something that continues to build. They are moving more equipment, more manpower into the region and theres a big concern that that could become a second front here. They have cleared out part of an area. We know that antitank missiles were fired at a kibbutz in the area yesterday. Artillery fire returned by idf. That is picking up dramatically. And then the drone strikes on u. S. Bases in other parts of the middle east, jay, which we saw oil prices really react to last night. Theyre elevated again today. What do we know . Yeah, no, its something thats being watched very closely, of course. Missiles sent in to deal with that, and theres some thought that all of this is going to build as we see the protests build. Thats something that seems to be fuel ago lot of the anger and then a lot of action across the region, and so thats something that were watching very closely as well. Most of that anger targeted at either u. S. Or israeli embassies, and you see the results of that in the actions. Jay, thanks for that. Well talk in a bit. Obviously, going into an uncertain weekend. Still to come, well turn our Central Bank Focus to china and the message theyre sending when it comes to key rates. Well get to a bunch of names on this friday. Csx, hpe, some reports on gm, calls on nvidia, tsm, and well look ahead to next weeks earnings, including some mega cap tech in a minute. Everywher is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. In its monthly fixing, china keeping its rates unchanged. Eunice yoon in beijing with the details. There have been moves by the Chinese Government to boost the economy and fix some of the lending problems. Yeah, absolutely. But what we saw is that this better than expected data this week seems to have given the policymakers a little bit of breathing room when it comes to policy, so the central bank had a stay put on the rates that are used as references for loans for businesses, as well as mortgages. Theres plenty of bearish sentiment towards the yauan, which is seen as one of the reasons against further rate cuts, but authorities here are toeing a very fine line. In fact, today, the central bank also made a record cash injection to the tune of 100 billion into the banking system. This was to keep funding costs low, of course, via reverse repos. So, barclays, as well as stock gen, had said longer term, they expect because of the weakness in demand here that there could be a further policy cuts of about 10 basis points. Housing, of course, a major factor. We saw this week, again, new home prices fall yet again in september. Also, evergrande, the struggling property giant, today said they were revising their offshore Restructuring Program for the offshore bonds. Didnt give a whole lot of detail, but what we do know is that the recognition hearing that they had scheduled for next week in manhattan has been adjourned. Now, in addition to that, of course, the country needs to deal with a lot of geopolitics, and today, we had a development on that front as well. The authorities here said theyre going to be restricting the export of graphite products, certain ones that are used especially in ev batteries, these would work similarly to the ones that have been used for two key chipmaking metals, and theyre going to be kicking in december 1st. So, a lot of different potential challenges for the policymakers here as they try to manage their economy. Eunice, its david. In my world, there are those who try to understand what the response will be from the chinese to that latest round of export controls on highend a. I. Related chips. Do we think this graphite export control that you just mentioned is the answer to what we saw from the u. S. Earlier this week . I mean, its difficult to say. If it was exactly a titfortat or if it was something in the works for quite some time. The thinking here, though, is that the and what we see, actually, in the state media quite a bit is that because the u. S. Has been putting in place these curbs themselves, seen here as an attack on chinas tech industry, that the chinese, why wouldnt they decide to put restrictions on certain ingredients and components that are needed around the world and especially in the u. S. I mean, the authorities here had said that these export curbs for graphite werent targeted at any one country, but it just so happens that the u. S. Is one of the big recipients, as well as japan and south korea. One big question, though, is really what the impact is going to be because they are restrictions, so theyre still allowed to export, and people arent sure exactly how the chinese are going to implement these restrictions. Eunice, well talk in a bit about some reaction on the street to nvidia in particular this week after the break. Good to see you. Eunice yoon joining us from china. Still to come, well follow up on netflix one day after its big rally, the biggest rally since 2021. In the next hour, some results from csx and the challenges facing the railroad operator. Well get an exclusive with the ceo. Take a look at the premarket. Were back in a moment. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. Premarket suggesting a slightly lower open, but check out some of the gainers premarket. Gm is up there. At least one report this morning, according to a top Union Negotiator, that the companys moving toward a tent ttent teate reenwi t uaw. Agemt thhe the opening bell in just about five minutes. Dont go away. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. Netflix on track to extend gains a day after surging 16 on that sub growth number and the earnings beat and the price hikes. The biggest singleday gain in nearly three years. Meantime, that got the attention o. Writers guild, which tweeted, great. Sounds like they can respond to s. A. G. s demands with an offer. Has nothing to do with that, though. No. I mean, take your shots when you have an opportunity, but that seems a little dirty pool . Or even not necessarily focused on the on whats really going on. I mean, whats really going on is they kind of are the endgame player in media. Youll hear that from a lot of people, and you cant necessarily draw conclusions about the strength of that quarter and assume that the other streamers, whether they be disney plus, max, paramount, our own peacock at comcast and on from there are going to see the subscription additions that netflix did, in part because of the crackdown on password sharing and others. Sh sports rights are whats getting interested for me, sara. Youve been following f1 very cl closely, but the nba not netflix, really, more amazon and apple what kind of participation will they continue to take in terms of the sports rights available . After the nfl, theres a lot of question as to the capacity for many of the existing buyers of those rights to really step up in the same way, at least the way that might be expected from the likes of the nba, which is looking for a significant increase. This is the prize and Everyone Wants it. Yeah, i mean, but theres the nfl, you almost if youre not in, youre not alive as a company. Whereas the nba, you can conceivably go for a smaller package, which may be the case. When do we get that . When does that happen . Its in process. It wouldnt be until the 25 season. Theyre negotiating now. I mean, the analyst love on that this morning. They deserve an emmy for managing investor expectations, according to bernstein. Morgan stanley says they delivered the objectives they set out a year ago, accelerating Revenue Growth back to double digits and expanding margins. Wall street was very pleased on this one. Yeah. Lets get the opening bell here in the cnbc realtime exchange. At the big board, its industrial player enerpac tool group. At the nasdaq, its ego, an urban ev battery producer, celebrating its listing via spac. Speaking of evs and sort of revisiting netflix yesterday, its worth revisiting tesla as well. A lot of street observers remembered that this is the Third Straight earnings reaction day in which tesla has fallen 9 plus, and theres a big note out today saying, plain volatility post tesla earnings is getting to be an easier and easier call over time. When you hear the biggest bu bulls, like dan ives, really trash talk the Conference Call and the quarter, there are questions that investors wanted answered, about when the price cuts would end, what thats going to do to margins. It was in the numbers and it feels in the tone for tesla, and i think thats what has analysts continuing to weigh in negatively, though we havent seen any downgrades of tesla. They still love it. They still love the longterm thesis. Even though its down 9 after three straight earnings prints, its still up 21 over that whole time period. Up 75 for the year. All relative, all in context, but were going to be watching these big cap tech earnings next week that will set the tone for the markets and a lot of them on macro drivers as well. The google with a lot of international exposure, for instance. Alphabet. Same with microsoft. It will speak to, i think, enterprise demand, and that there continues to be questions about whether that can all hold up. Another thing well talk about a lot, i think, is a. I. , and when it comes to tesla, for example, they continue to invest heavily in a. I. , both to fuel autonomous driving and full selfdriving but also separately as well. And then, generative a. I. Is going to be a key question for microsoft in terms of the introduction, of course, of its recent product pilot product, not to mention alphabet and bard and what theyre seeing there. We havent talked that much this week, at least, about a. I. , even though there have been a number of different forums this week in which youve got very prominent people talking about things like in ten years, 80 of all jobs are going to be basically replicated by a. I. It feels like its so hard to know what the Immediate Impact is going to be. Its like a question for another day when it comes to valuations of companies, unless youre nvidia or, you know, some of these picks and shovels, as they say. Right. Thats where we are. As we point out many times, and i was talking earlier about copilot, microsofts enterprise sort of a. I. Product that assists you in doing your job, but as we say, right now is a great deal of investment. We havent seen as much yet on the product side here and there, but there is an expectation, obviously, that is coming in a significant way. The other beneficiaries are sort of just, in a simple way, datacenters. Youve got so much equipment that needs to be delivered into these datacenters as a result of the additional Computing Power thats needed to fuel these generative a. I. Models that thats, you know, thats not a bad business. You can take a look at Something Like vertiv. Remember dave cody . That was one of the more successful spacs of all time. And you know, thats a name that has been a beneficiary of this trend. Some followthrough to your point, carl, on the earnings movers. Netflix up again. At t is higher again today. Tesla is lower. Theres some carnage in the solar stocks, though, that i think are worth mentioning. After we got news yesterday from solar edge, one of the big i mean, lots of downgrades for that stock. It sounds like kind of a repricing there of whats going on when it comes to europe. They came out with a preannouncement, essentially. You can see what its meant to the overall market cap. Theyre losing 35 of its value. Heres the key quote. This was a preannouncement, not the full earnings. We attribute cancellations, significant cancellations particularly from europe during the second part of the Third Quarter, substantial unexpected cancellations and pushouts of expected backlog, higher than expected inventory in the channel, slower than expected installation rates, much slower at the end of the summer and september where traditionally they do see a pickup. And again, this was focused in europe, where their distributors just did not come through in terms of the demand that they had anticipated. It is having, as you point out, sara, an impact largely across the board for the likes of end phase and sun run and sonova. First solar, the big player here in the United States, and the big manufacturer here, not, as you see, suffering nearly as much. Again, this was european demand. Unexpectedly slow, particularly for what is typically sort of a rebound come into the fall. Bank of america cuts the price target from 146 to 65 and goes to sell. Thats the kind of action were seeing on solaredge with the stock down 35 . They also mentioned higher rates a bunch in this report, and i am curious. Thats the excuse du jour. Its valid, im not saying that its not, but having all sorts of impact there has and questions about, i think, those higher inventories and whether theyre going to be able to unload them. Meanwhile, fairly defensive stance here at the open. Dow is being led by merck which did get an upgrate. Verizon has earnings next week. Procter, coke, and then axp is going to be the lighter, guys, des despite all the metrics we ended up talking about a few minutes ago. Kpexpectations were built ini guess. The news from American Express was pretty good on the revenue side, on the commentary side. But you know, its an interesting one. I think that people are just expecting the consumer to turn. I think that, you know, the provisions for bad loss is a reminder theyre expecting the chargeoffs to increase and the delinquencies to increase. We heard a little bit from discover this week as well. They warned about that. Again, i mean, i wrote down the quote because it wasnt a recessionary kind of thing, but they said that they raised their loan provisions to just over 7 , sbr increasing a modest deteriorating macro outlook. But modest was the keyword from discover. You have to wonder. Travel and entertainment, up 13 in the quarter, but we did get that warning from the state Department Yesterday for americans traveling abroad. Theres obviously been evacuation notices from the uk and the United States out of countries like lebanon, so i wonder at the margin if travel just gets a little more treacherous or at least by perception, and if that stems some buying at the margin. Yeah, and speaking of, we are seeing Energy Higher again today after we saw that big jump yesterday on the news of the drone attacks on u. S. Bases in the middle east. I think iraq was one of them. Energy is one of the actually, just flipped negative, but it was opening higher. Its been kind of a mix. Weve got staples up today. Real estate and utilities and health care. So, theres definitely a defensive tone to the market right now. Techs under pressure, so the nasdaq is down 0. 33 . There was one staples note that stood out, rbc saying its an overreaction to the obesity drugs here when it comes to some of these stocks. And there are other factors at work. International slowdown concerns. Higher Interest Rates making these bond proxies less attractive, but on the question about obesity drugs and whether longterm they will impact consumer appetites for sweet and salty snacks, he says a little bit overdone when we just dont know the data. I think were going to talk to him in the 11 00 hour of squawk on the street. Meanwhile, story on the wire this morning about novo and lilly testing older versions of wegovy or mounjaro on kids as young as 6. Adultonset diabetes in children is something weve seen. We should point out, ozempic is the diabetes drug that has been out there for over five years that also showed the significant ability to reduce weight in those who took it. Wegovy is the weight loss drug that novo has, and mounjaro is lillys drug. Its got a dual mechanism in terms of replicating these hormones that can make you feel satiated, essentially, and it is yet to be approved for weight loss, mounjaro, but its at the highest dose has the largest single weightloss reduction, as much as 22. 5 of your body weight, your bmi. So, just remind people what were talking about, because sometimes i think it can get a bit confusing. And mounjaro obviously is being used off label right now, but they have yet to get the full approval for weight loss itself, which is seen to be the most effective. I think 17 was where ozempic or i should say wegovy came in. Theyre all considered game changers, though, by the market. Without a doubt. And the kids thing adds another potential revenue. 20 of u. S. Kids are obese according to the cdc, defined by 99 of their body mass index thats greater than 95 . To the point we were discussing this yesterday, and so i did a bit more research, talked to listened to some things, talked to a couple people. The expectation is youre going to be on this more or less forever. Somewhat similar to a staten where you just take it every day. Well, and if youre starting it in kids, its even longer. Exactly. These are for chronic conditions of obesity. Now theyre being used differently. Theyre being used for people who want to just take weight off in a certain period of time, but i mean, the one doctor i was listening to, average male weighed 270 pounds. Average female was 230 pounds. Thats where the chronic usage would be. Right. Guys, should probably mention gm, the second biggest s p gainer this morning. There is a wire story that cites a Union Negotiator that the companys zeroing in on a tentative agreement. Were going to hear from shawn fain later today. He will have an update on facebook live, we believe, somewhere around 4 00 eastern if reporting is correct. Well see if thats anywhere near being true. Gm does have earnings next week, but in a not great tape, up 2 is going to make it the number one s p name. Interesting because seems like gms kind of pulling away from the other two big three in terms of negotiation momentum. Ford continues to lay off workers as a result of the pressures regarding supply and production. Well see whether this turns out to be anywhere near being real. I cant believe how long this has been going on now. A month. Phil lebeau told us. He said it was going to go, and he was right. Havent heard from him lately. I want to get a lebeau meter. We have him in the next hour of squawk on the street with a preview of what to expect. Im glad to hear that. Another mover im watching is mattel because ithought there was an interesting analyst call on this. Citi initiated the stock and likes it. This isnt a stock thats necessarily beloved by wall street, but they initiated as a buy at 26 so theres some upside, and they see some green shoots of a turnaround in mattel. Rightsizing the cost structure and meaningful deleveraging of the balance sheet. They havent really seen the topline growth. There was so much excitement around barbie, but i think high hopes that they would see more of an impact on that. Citi says its still coming, potentially. Its the most valuable franchise here, and they also see a return o. Disney princess as benefitting mattel. Guess thats happening. I dont know. I have two boys that arent interested in disney princesses. Theyre not . No. Lightning mcqueen. Thats the cars movie. Thats very big in our house. Were also getting into star wars now. That could go on for a long time. A long time. It feels like theyre too young for it, but theyre very into it. They like they fast forward to the battle scenes. Really . The light saber battles. Those are boys. Pcs, hpe, at least, yesterday, the update, disappointing. Interesting dynamic surrounding enterprise and i guess the pcs on the hardware side. Acor, the taiwanese pc maker, said they believe pc demand is back. That it bottomed in may, that q3 desktop revenues up almost 30. We did get an upgrade of best buy yesterday out of goldman, but that was no good, what happened with hpe yesterday. It was their investor day, and were going to talk to the ceo in the 11 00 hour of squawk on the street and it was put into the release a new guidance. I want to read the numbers because they were well below what the street is expecting. 182 to 202. The street was at 214. Theyre expecting a hit from currencies as well, but i think there are questions for a company thats been trying to tie itself to artificial intelligence, remember antonio has been saying thats what theyre pivoting and the enterprise of artificial intelligence. But its selling off, and its had a few rough quarters. Looking forward to hearing from him. Should mention shares of apple. Still the largest market cap by far. 2. 7 trillion. Some reports in the journal about tim cooks continued travels through the country of china which represents as much as 20 of apples sales. And continued concerns about demand for the 15, in particular, once again t c, the citing of that ban of Government Employees bringing an iphone to work, for example, and what effect, if any, that will happen. This is his second trip in not that long. Hes been spending time in one of the most important markets for apple, after the u. S. And europe. Theres been, again, very, i would argue, pinprick reporting on the way in which googles pixel is taking share in countries like japan and in a copycat move, in a way, googles beginning the production of the pix pixel in india. Oil is going to zero in on two weeks of gains. We did get the headline that the u. S. , according to reuters, will be a buyer for the spr, looking to add 6 Million Barrels by january. Well see how easy that is given that wasnt the initial target, guys, to buy somewhere in the 70 range . Oh, yeah. Missed the opportunity there, as oil prices go higher. Its hard to forecast this, because i think the wild card is iran, and why the market moved so much on word of the the drone attacks on u. S. Bases from iranianbacked groups. So, any time that enters the fray, we talk about the big oil producer, and thats what causes oil prices to go up. Any escalation that involves iran or iranianbacked forces. Right. Meantime, u. S. Production is coming in on records or approaching records. We did get the reporting midweek about venezuela perhaps helping supply there, but that really was only good for a day or two of relief before prices revisited 90. Interesting that gas prices are, what, 3. 50 now, down some 30 cents. Gas futures, 52week lows. Not sure whether thats a comment on demand and recession or whether its some people say work from home means you drive less. Elon musk was saying about getting back to the office, spoken by a man who sells cars. Yes, although he has very hes very emotional about that in general. This is a man obviously who basically has never missed a day of work in the last, i dont know. What did he say, let them eat cake . Something like that. I mean it was very elitist to be able to work from home. He was very passionate about it. But hes taken seven days off all year. And he goes to the office every day. Various offices, as you might imagine. Hes going to roll them over for 24, check with hr. He might. As we go to break, the fed speak not over yet. We got harker a few moments ago, did mention that the job market is surprisingly strong, in his words. Mester is coming up at 12 15, and with bostic under our belt, thats the array of fed speak for the day. But you do have the tenyear not far from session lows, just above 4. 9 . When you need to prepare for unpredictable adventures. gasp you need weathertech. 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Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. The nasdaq 100 for the week, some interesting bounces in consumer names which you know have been hurt in recent months. Starbucks, dr pepper. The number one gainer for the week is going to be netflix. Almost all of that gained yesterday on that 16 bounce. Well take a quick break here. Dow down 29. Back in a moment. I promise as an independent advisor to put the Financial Wellbeing of you and your family first. I promise to serve, not sell. I promise our relationship will be one of partnership and trust. I am a fiduciary, not just some of the time, but all of the time. Charles schwab is proud to support the independent Financial Advisors who are passionately dedicated to helping people achieve their financial goals. Visit findyourindependentadvisor. Com this is american infrastructure. Megawatts of power, rails and open road, and essential services of every kind. All running on countless invisible networks, making it a prime target for cyberattacks. But the same aipowered security that protects all of google also defends the systems running americas infrastructure. For these services. For the 336 million of us living here. Its been a positive week for the Energy Sector adding to its gain for the year. Where do oil prices fit into the future . Lets go to Pippa Stevens for a breakdown. Energy stocks came back into focus during the Third Quarter with the xle rising 10 . With west texas intermediate back above 90 bucks, we take a look at which stocks within the Energy Sector have traded the most in line with oil prices on average over the last ten years. The closer to a value of one, the more the stock tracks the price of oil. Oil Fields Services name halliburton came up on top. Plans for drillers which directly impacts the equipment and services that you need. Tracking crude closely with more than half of the revenue coming from oil production. Across the sector, apa, coterra and eqt have the lowest correlation to gas prices. Theyre natural gas producers. Back to you. Pippa, carl mentioned gas prices. Whats happening there . Are they delinking . Are we talking about natural gas or gasoline at the pump . Both. Whats happening with gasoline prices is we have seen the spread come down significantly. Refiners have been turning out a lot to get exposure to diesel, the diesel prices which are hugely still up amid cuts from russia and saudi arabia in their oil production. Refiners, their utilization rates are up and that means that gas, gasoline is being produced as a byproduct as refiners keep that utilization up. Got it. That answers it. Thank you very much. As we continue to watch the energy prices, the bottom of the list of the subsectors right now, Regional Banks. Theyre getting hit hard today. Down 4 . Continuing to digest some of the fundamentals of that business as we go through earnings right now. Its not all bad news. The railroads are getting a bounce today regents financial, seeing problematic. The stock is down 14 after that quarter and thats pressuring the overall index. Watching transports. Not a good week. Losing 3 for the week. One of the worst weeks since april. Well talk more about that. Its been a negative week for that sector. Well talk about it in the context of rails coming up today. An exclusive with the ceo of csx. Be right bac k. Announcer sponsored by sector spider etfs. What does searching for a medicare plan feel like . Its kind of confusing. Its so complicated. We get tons of mail, tons of calls. Its annoying. [narrator] ehealth is a less stressful way to find health insurance. To prove it, we found people looking for a new medicare plan and we monitored everyones stress. Your Mission Today is to find a Medicare Advantage plan that fits you. [narrator] half did it by searching the usual way. [speaker] on this side, you get to use everything on the whole internet, except you cant use ehealth. [narrator] the other half did it by matching with ehealth. The people on this side. You guys all get to use ehealth. Com. You can even call ehealth. On your mark, get set, go find a medicare match. [narrator] and you can find your medicare match. Give us a call or visit ehealth. Com. 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Of the top three, i found two that were better than the ones i got. Its looking like they could possibly save me quite a bit of money. Compare all in one plans, all in one place, ehealth. [narrator] ehealth, your medicare matchmaker. Good morning. Welcome to another hour of squawk on the street. Were live at post 9 of the new york stock exchange. Take a look at stocks this morning. Its kind of a mixed picture. The s p is down a third of 1 . Theres strength in some of the defensive groups as you can see there. Everybody else is down. Energy is now lower. Its turned around. It started up higher at the beginning of the session. Down 1 . And some of the cyclical groups and tech groups as well, Communication Services and Consumer Discretionary all under pressure right now. On a week where stocks are set to end lower. 1. 5 right now for the s p and for the nasdaq, about 2 . Another vote for House Speaker just getting under way this hour. This is number three for jim jordan. Well bring any headlines as soon as they happen. Also, just want to show you quickly whats happening with bonds of the tenyear did breach that 5 level. It happened yesterday. Post powell. Were backing off a little bit. 4. 9. Here are three big movers were watching right now. Amx is in the red. Some of the streets pointing to the guidance potentially implying caution heading into q4 after such a big beat. Shares of Solar Power Companies solar edge cratering this morning. The Company Expects lower Fourth Quarter revenue. And were watching the railroads. Csx, despite a revenue decline, joe hinrichs says theyre seeing improving trends and hes going to join us to break down those numbers a little bit later this hour. Lets get more on the markets here and the economy, guys. Because the big surprise i s know were seeing the higher yields. But one of the surprises is just how much better the economy is going to look. Were going to get our first look at q3 gdp next week. This will be interesting. This has been a week where all the economists on the street are revising higher than outlook for Third Quarter gdp. Catching up to the, what are we, 5 . 5 is a typical one. Thats not even nominal gdp. Nominal is higher than that. What accounts for that . Well, a number of factors. But i think the Consumer Spending piece of it is the biggest one. Thats 70 of our economy. And there are a lot of mea culpas on wall street about how underestimated the strength of the consumer was in the face of the rising rates and inflation. One that stood out to me was pantheon which has been more negative on the economy and looking for the fed to pivot earlier. They say now that there are revisions to the National Accounts because everyone is tracking savings right now. It suggest that is the remaining stock of excess savings is twice as big as the prior data indicated and its 1. 2 trillion. Economists say they underappreciated the extent of the tail wind in tax incomes after the first half. Its Income Growth and savings. The orange line is what matters there. And it kind of makes you wonder why people didnt believe bank ceos when they kept saying, guys, wearre not seeing the dotcom that youre translating from other services. We had jamie dimon talking about a hurricane. He wasnt talking about Consumer Spending. Its hard to track the consumer Balance Sheets and these excess savings and a lot of the feds own models pointed to the fact that theyre wearing off toward the end of the year. Theyve remained elevate asked in the face of these new student loan payments as well, not having as much of a hit. The amx ceo saying he wasnt seeing a big impact on that from spending. What are we supposed to believe when it comes to the data points if they can get if we see a new round of not revisions, but data that indicates something very different than what we anticipated . Stronger, you mean . Yeah. Its something that the fed is trying to figure out too. Nobody expected this and nobody knows whether its a its a good thing because its a soft landing or a bad thing i guess my question is, was it not being pressured properly previously . Its hard to measure excess savings. Its not a thing. Its being measured now because there was some stimulus during covid. And people got the paychecks and there was nowhere to spend it. I know all that. Theres a why is it difficult to measure . Why is it so thats why we because theres no Realtime Data beyond what we get from the bankers about whats going on in deposits and spending. Which is why the comments have been important. Weekly credit card data is important. Theres a lot of High Frequency data on this stuff. But theres no data release. Thats why pantheon is looking at National Accounts. Its more art than science. Powell, for his part and i think the takeaway on powell yesterday, hes content to wait and see. But he did discuss this risk of hotter data. Heres what he said. We are attentive to recent data showing the resilience of Economic Growth and demand for labor. Additional evidence of above trend growth or that tightness in the labor market is no longer easing could put further progress on inflation at risk and could warrant further tightening of policy. So theres the could warrant further tightening of policy. Wasnt quite fully dovish. I just want to bring you comments from the last hour from Philadelphia Fed president harker who is a voter which is why i wanted to highlight it and who is seemingly content to stay pat. I remain rooted in my opinion that we are at the where holding the policy rate steady is the prudent position to take. A lot of them pointing to this commentary that theyre getting from business and their contracts on the ground which is why i always Pay Attention to the beige book which did signal that Economic Data is not really picking up. Its mixed signals to your point. Its hard to figure it out. Lets get more investigation on where the economy is going, what the 5 tenyear yield means. Lisa shallet and nathan sheets joins us. Nathan, which is it . What is happening with the consumer . By our reckoning, the u. S. Consumer has just been exceptionally strong. And a good part of this was pentup demand for services coming out of the pandemic. And lots of households were in a place where they hadnt gone on vacations and had entertainment and leisure activities outside their homes for several years. Once the pandemic abated, households barreled out and have spent vigorously over the last couple of years. More recently, maybe some of that is starting to soften. But were starting to see goods spending pick up. So it is a very absector that were seeing. That was reinforced by the sales data we got last week. By our reckoning, its hard at this stage to see much evidence of a meaningful slowing in the consumer. And really it is supported by the tight labor market. Consumer spending, hitting the labor market, supporting demand for labor, pushing up wages and then supporting more Consumer Spending. Do you think the fed is going to have to tighten more to Powells Point . Do you think it will hurt the progress on inflation . I think at this point further tightening is a distinct risk. Our baseline expectation is in line with that of the federal reserve. That the fed can get further traction on Financial Conditions by holding this rate at 5. 3 for some time and as they hold the rate, there will be further headwinds to Economic Activity and frankly, thats supported by this runup in tenyear treasury yields that weve seen. Thats pulling back on Financial Conditions generally. And now thats manifesting itself after a long while in a higher tenyear treasury yield which that tenyear treasury yield approaching 5 , thats doing some of the feds work for it as well. So, lisa, what does all that mean for Equity Investors because the stronger Economic Data and consumption data is good for the soft landing for earnings, but then it also could potentially result in these higher treasury yields and more fed action which is not great usually for stocks. Yeah, look, i think that the fundamental issue for Equity Investors is what multiple do you pay for what appears to be mid cycle earnings. I think that theres there was a thesis for a good part of this year that the the bear market rally has been based on is that we were at trough earnings and earnings are going to accelerate from here. If in fact Economic Growth is as strong as the numbers that were currently seeing, if that persists, and we get the Earnings Growth thats forecast, which for the next two years is about 12 each year, youre going to look at multiples at price earnings multiples that come down. Investors have to remember, you know, it is very hard for us to be in a world where 5 Interest Rate competes with a 20 times forward price earnings multiple. Yes, earnings may be much better, but price earnings multiples i think, you know, when you typically have a 5 Interest Rate, look a lot more like 16 1 2 to 17 times our earnings and so in aggregate, you end up having an index that gets very stuck trading sideways. 17 times. I mean, yeah, im just trying to understand that, lisa. You think were sort of a neutral territory when it comes to the s p, lets say, for the next two years, despite what will be 12 on 12 in terms of Earnings Growth. Potentially. Because if you get that type of Earnings Growth, it means that you still have pretty strong topline growth and you still have inflation risk. And so, you know, i think investors really need to think about how you get there. Im not saying that the index necessarily has to go down to get you there. But it means that, you know, those earnings just get absorbed by lower multiples and you just say stuck in this zip code where the index itself, the s p 500, has a really hard time breaking above prior highs which as we know is about 4800 back in january of 2022. Everyone, you know, has been highfiving about the markets recovery here year to date. But the reality is on a twoyear basis, the market has gone absolutely nowhere. The s p 500 is trading about where it was in mid2021. Were still, you know, 10, 11 below the alltime high in the s p 500 and were about 16 below the alltime high in the nasdaq. I know that shocks people. To remind them that most investors have not round tripped their losses from this bear market. And then theres small caps. The iwm i think is basically flat, nathan, since covid began and i wonder if you think that reflects funding pressures or lack of access to capitoal . It shows up in the numbers. Absolutely. Were certainly in that camp. National han . The Small Business sector is one that when you look at some of the sentiment, it does feel softer. Exactly whats going on i think is an interesting question. I think your hypothesis maybe it has something to do with funding is a good one. The reality is that these smaller firms are dependent on banks and particularly dependent on small banks. And what were seeing in the feds senior loan officer survey is a distinct tightening of credit conditions. Many of these firms were hit hard by covid. In services and i think of had the scamper to try to Fund Additional labor and thats been a bit of a problem, a bit of a drag on them Going Forward. So i think there are a lot of things that youre seeing in the equity prices and indications of small firm activity. Well leave it there. A really good conversation with both of you. Thank you. We continue to monitor the israel hamas war. Jay gray live from tel aviv with an update for us. Jay . Reporter yeah, and, look, the world watching to see which comes first, if we have the tanks that are assembled at the north end of the gaza strip or the trucks loaded with aid at the south end moving into gaza at this point. We expect to see the trucks loaded down with food, water and medicine, moving into gaza this morning. That did not happen. The situation on the ground, we are told, just too volatile right now to bring that muchneeded aid and 2 Million People or more trapped in gaza right now and havent seen deliveries of just the basic necessities for more than two weeks at this point. On the north end, we continue to see these troops aligned and ready to move in. Tanks and other gear in place along with thousands of soldiers. We know that weve heard from the Israeli Defense minister who has said that theyve seen gaza from afar, but these troops will see it from the inside soon. All indications seem to be that they are heading and getting closer to that ground assault that weve talked about now for several days. More bombing runsby israeli fighter jets throughout the evening. Today, hundreds of strikes were made and we know that they are also carrying out contained raids near the fence with gaza. They do still believe that some hamas operators are inside israel. Theyre working to try to identify those as well. But it continues to be a waiting game between the aid and the tanks rolling in. And right now, neither has moved. Jay, thank you very much. Well continue to turn to you for updates on the hour. Jay gray from 12. As we head to break, heres our road map for the rest of the hour. Csx shares are pushing higher. And what the ceo is seeing when it comes to the broader economy. What is beating the tenyear as an investment. Were looking at everything from high yields, cds, to bond etfs and dividendpaying stocks. And shares of fitness stocks getting a boost as investors weigh the impact of these obesity drugs. G owti aadbish sllhe. Stay with us. Your record label is taking off. But so is your sound engineer. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Nice footwork. Sman, youre lucky,. Watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Were taking a look at the transports in our sector sort today on pace for its third negative day in a row. Fifth straight weekly loss, down about 3. 5 for the week. The biggest drags, the airlines as we mentioned early, united, delta, southwest, all down 4 or more. And theres the truckers. Jb hunt. The company ceo did warn were not at a point yet to say were out of the freight recession. We have another read now with csx, sticking with the transports. Those shares are higher. Citing weaker rail demand. Morgan brennen is here to discuss along with a special guest. Hi, morgan. Its good to be here. We have a special guest and thats the ceo of csx joe hinrichs. Thanks for being with us today. Good morning. Thanks, morgan. Csx does a lot of work with jb hunt. When we hear the comments about were not out of a freight recession yet, how do you see it . Well, actually, were seeing mixed results overall. Part of the issue is the international business, things coming into the ports. Its been down all year and still down. Weve seen that stabilize. But encouragingly, weve seen growth now for the last several months of domestic mobile business which jb hunt is a provider of. Thats been encouraging to us. We showed that last night. For a number of months now its been growing year over year and were seeing that into the Fourth Quarter. Thats something. We have an economy that doesnt seem to be growing. We know retailers are working off these higher inventories. To hear stabilization in that part of the market certainly gets attention. Yeah, i think theres a couple things. There was a significant destocking in inventory and perhaps thats played itself out. A lot of the things that we touch are more fundamental to the economy. Not so much on the retail side. Which, of course, is why i think international has been down. Our merchandise business which touches that industrial complex, weve grown volumes this year. I think for csx, whats playing out is our leading Service Numbers in the performance were gi giving to our customers is bringing onto our network. I want to get into that a little bit. First, just one more macro question for you. At a time where we are seeing Economic Data, that is holding up and more resilient than many folks had expected going into this year, is that what youre seeing in realtime too given the fact that you do move so many different types of good across so Many Industries here in the u. S. . Yeah, were encouraged by what were seeing in the Fourth Quarter. I dont want to get too far ahead of ourselves. In the first three weeks, weve seen growth in sectors that have been stagnant for most of the year, chemicals, plastics. Its been down all year along. Coal and automatic continue to be strong. Were seeing signs of optimism in the chemical side. Thats one to watch. Pulp and paper still a little bit short. But weve seen encouraging start to the quarter so far. Okay. I want to get your outlook for pricing. Just as importantly in a disinflationary environment that can be a doubleedge sword, the outlook for costs. On the pricing side, weve been supportive this year. I think people see the value that rail provides on esg but on the total cost proposition. We have labor inflation and were going to see more of that next year. Were running better which is helping us offset some of the costs. If you look at our costs from Second Quarter to Third Quarter, we kept them in line. Theres inflation on rail ties and all those kinds of things as well and thats going to continue to eat into our business. You were talking about service thats been a big focus for you at csx since you took over, improving service metrics. Youve taken market share. Where is that happening most meaningfulfully, is that from your director competitor Norfolk Southern or the truckers . Its a little bit from everything across the board. You think about automotive. Thats largely been based on service. But also on the domestic side, were seeing growth there. Our Industry Leading Service metrics and performance is leaning into csx more. So our customers are thankful. I was a customer for decades. Im never going to lose sight that we are providing Great Service and it helps the economy and our business and customers overall. Coal held in strong in q3. Volumes up 9 . This was driven largely by export coal as we see Global Demand continue to remain resilient for it, both in terms of thermal and met coal. Given the geopolitical situation right now, the increased demand tied to the war in ukraine and tensions across the world more broadly right now, does that continue . Yeah, we think so. Were hearing from our customers that it will. A lot of it is going to india for Steel Production and a lot of it is going to eastern europe. And you can see, obviously, with ukraine, theres more Steel Production needed. Were seeing demand for thermal exports as well. But prices are up. Not where they were last year, but certainly up during the course of this year. And strong demands. We see that Going Forward for quite some time. I want to shift gears a little bit. Youve been through a number of labor negotiations. Not just as a new ceo at csx last fall when the railroads were going through their negotiations. But also as a Top Executive at ford before that. Walk we through how this plays out potentially with the uaw as were now four weeks into the strike and we see more facilities or at least we have in recent days expanded. Yeah, morgan. I think i had the pain and privilege of leading four National Negotiations with uaw. Every single one of them is unique and different and this one obviously is very unique. I never thought i would see the day where a lot of the pain was inflicted on ford given the historic relationship with uaw. Its in both parties interest to find a solution. The winners are the competition. So, you know, obviously ford, gm and stellantis have to be competitive to keep investing. But of course the workers want their fair share as well. Obviously we hope theres a solution. We obviously move a lot of automotive. Were the number one automotive mover in the rail sector. Its important to us too. But were encouraging both sides to find a resolution. I dont see how this benefits anyone if it continues to go like this. Okay. Joe hinrichs. Great to get your thoughts today. The shares are higher for the year and leading the transports higher today in what is otherwise a down week. The pain and the privilege of dealing with the uaw is a good way to put it. Morgan, thank you. The s p for its part set to end the week in the red. 1. 5 at this point in the game. Check out the names bucking the trend, top gainers for the week, netflix is there. Bf corp. Gets an activist investor engaged in its stock. Other rngseain movers in the mix as well. Well be right back. Announcer realtime Exchange Sector sort is sponsored by sector spdr etfs. Some things are good to know. Like. Where to find the cheapest gas in town. And which supermarket gives you the most bang for your buck. Something else thats good to know . If you have medicare and medicaid, you may be able to get more Healthcare Benefits through a humana Medicare Advantage dualeligible special needs plan. 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Its outright more risk. Lets start by saying as investors are getting yields of 5 on longer term u. S. Government debt, riskfree debt backed by us the taxpayer at large, youre getting north of 5 on shorterterm debt. 5. 416 . You need a compelling reason to go yield chasing in this environment. The dividend yield right now is just around onehalf of 1 . The dow 30, that socalled the diamond trade, that dividend yield is 2 right now and thats like that blue chip part of the index. Give you a perspective versus 5 treasury yields. Within the s p, there are 48 stocks that have dividend yields of 5 or more at this moment. Only nine of them have those yields without a drop in the stock price. If you want that added layer of security on those dividends payments on the stock side of things, relative safer, you can screen for higher yields in those socalled dividend aaris troe accurates. In the s p 500 dividend, only six of them have yields of 5 or more now and only one of them has had positive Price Performance over the last 12 months, thats asset manager franklin resources. Year to date, down 14 . But its still up roughly 3. 5 on a oneyear basis. Theres the bond options. The spdr bond, yielding just around 2. 7 right now. You can see for that one, for that, its 2. 7 . The i shares Investment Grade eft is yielding 4. 3 . Higher grade investment debt. And the highyield bond fund is 6 right now. That gets you north of 5 for more risk. I will point out, that apolo chief global economist said this morning that the equity risk premium that you get in the market right now versus risk for yields on the bond market have made stock valuations the least attractive relative to bonds in two decades. Carl, thats the reason why many investors are thinking about if you want to go into things other treasury debt if its yielding 5 . Ill send things back over to you. Thats a good break down. There are alternatives now. Dom chu. Meanwhile, what do investors make of the stock market with these yields at 16year highs. Longtime market vet floor operations art is with us. Well get his take on the growing geopolitical risks abroad. Were back in two. Getting breaking news out of washington. The white house is breaking down some of the requests that the president made last night. The grand total is 105 billion. Thats the request from the Biden Administration to capitol hill for new aid to israel and to ukraine. Senior Administration Officials breaking down the details inside that request for reporters over the past few minutes. Heres what we know so far. Theyre asking for 61. 4 billion for ukraine, 14. 3 billion for israel, theres another piece in here thats going to be humanitarian assistance. Thats going to be 9. 5 million. Not a lot of breakdown of how much is going to gaza or ukraine. But thats the humanitarian assistance figure overall. Interestingly, 2 billion in this request for the indopacific region. That including taiwan. Obviously, another hot spot that the president sort of alluded to a little bit to last night. Border operations here in the United States, that request is 6. 4 billion. A whole breakdown of what that money could go to. But the president here signaling that he needs more funding for the border and security there here in the United States. Overall, 105 billion is the total figure here and interestingly, carl, this letter is sent now to capitol hill. Its being sent to the speaker patrick mchenry. Theres no speaker of the house right now and its not possible for congress to move forward until there is a speaker elected. Not clear exactly congress would be able to move forward with this if republicans on capitol hill cant pull their conference together and elect a speaker of the house in the coming days. Of course, the question is, what priorities to republicans have and how would they change this request. The request from the president is an act. Its congress that ultimately spends the money. Carl, back over to you. As the ap just wrote, the white house seeking swift action despite house chaos. Thanks. Lets get a news update with bertha coombs. Heres whats happening at this hour, 20 truckloads of humanitarian aid still stick on the egyptian side of the border with gaza today. Negotiations over the logistics of the deliveries said to be continuing this morning over israels concerns that the aid be kept away from hamas. A United Nations spokesperson told reuters that the trucks were due to start moving, quote, in the next day or so. A texas judge has ruled conspiracy theorist alex jones cannot use bankruptcy production to avoid paying more than a billion dollars to sandy hook families for his conspiracy theories that the massacre was a hoax. Its the latest in a string of legal defeats for jones after juries in connecticut and texas found him liable for spreading falsehoods about americas Deadliest School shooting. A maryland judge was shot multiple times in his driveway thursday night. Police say Washington County judge Andrew Wilkinson was transport today the hospital and later died. Police say theyre looking for a man in connection with the investigation according to the court docket, judge wilkinson oversaw a Court Hearing about the mans divorce thursday morning. Back over to you. Bertha, thank you. Cnbcs latest allamerica survey is out. The results may surprise you when it comes to the stock market. Lets get to Steve Liesman with some of the details. Americans down on the economy, down on stocks and worried about their retirement. Take a look at the outlook here. Ill cut to the chase. This is one of the largest gap between those who were negative saying its a bad time to invest in stocks. You got to go back. Here in 2020, we had a big gap and, again, back here, coming out of the financial crisis we had a very large gap right there. Where do people see opportunity . Interestingly, realize estate s coming down. It goes on as well when you look at real estate was 39 in april, 2022, now its 32 . Stocks, you can see here, theyre up just a little bit 17 . A little bit more interest, but maybe not as much as you would have thought when it comes to interest in savings investments and cds. Crypto coming way down. First got into our list a year or so ago and it was pretty high. It was as high as 17. Now its down to 18 . Lets look at those with actual money in the market with 50,000 or more. More positive on stocks. Thats a good sign. But getting a little more interest in treasuries if you add in corporate bonds. Its actually 27 in terms of fixed incomes. Rivaling stocks and, again, not so hot on when it comes to crypto. Lets look at the issue here when it comes to people being stressed out about how much they have saved for retirement here. If you have no investments in the market, 54 of those we polled have concerns are stressed about their savings. Even if you have investments in the market. Look at this, if you have more than 50,000 in the market, only 28 are stressed. Moving on by age, coming down, coming down. 65 and older, not stressed about how much they have saved for retirement. I actually think this is a good thing. I dont know what you guys think. The fact that 18 to 34yearolds are focused enough on how much theyre saving for retirement that theyre stressed out about, i think its a good sign. I dont know what you think, carl . Wasnt it written about the boom ea boomer nest egg . The greatest transfer of wealth, i think it was 7 trillion. Thats the number thats often kicked around. Theres a big chunk coming down. By the way, its a little bit of a tax chunk depending on the tax laws at the time for the federal government as well. Fascinating numbers. Thanks. Stocks in the red this morning as the street heads towards the close of the worst week in a month. Ubs Financial Services Operations Director joins us this morning. Cant say that you didnt warn the street about the prospect of higher yields. I wonder if you think 5 is any kind of ceiling now . Well, actually, the technical ceiling on the cocktail map is probably around 5 and a quarter. But we did touch it yesterday very briefly in after hours. What youve got there is a push pull between the flight to safety, with all these all these wild things going on around the globe and the fact that the usual buyers of u. S. Bonds, the chinese and the japanese, are pretty much elsewhere. The chinese are having their own economic problems. The japanese are trying to get things started. So the normal buyers arent there. Thats why yields are going up despite what should be a general flight to safety. And then to take us way off course, carl, this thing with the speaker of the house is so bizarre, the were in a near state of war and heaven forbid if something should happen to the president or Vice President , the presidency would then move to the speaker of the house. Would it move to the president pro tem of the speaker pro tem of the house . What are the constitutional rules for that. It can get even whackier. Only the house of representatives can declare a state of war for the nation. And without a full speaker of the house, it cannot happen. One can only imagine that in moscow and beijing and other places, theyre sitting down and saying, very confusing american way of politics and can we do anything to frustrate it . Here we re. As somebody said yesterday, if it happened to any other country, the u. S. Would be calling for stability from afar. That said, art, in terms of levels here, i mean theres been a lot of discussion this week about resilience and you should hand it to equities for holding in 4300 at the time. I wonder where you think now the bulls whats the must have, the must do . The really must is in general terms, 4200 and the s p and if you want to get technical and extra sharp in the pencil, its about 4175. So you break the 4200, that may be a bit of a culture shock. If you then have a cascade selloff, it takes you below 4175. I think youre going to see people start to hunker down and maybe take some money out. You know whats weird, so treasuries are not acting like safe havens right now. The dollar is weaker on the week. Usually the dollar rises during geopolitical unrest when gold is catching a bid here, dollar is weaker. It rises when treasury yields are rising. This whole notion of safe havens is being flipped on its head. It is being twisted and turned here, sarah. And thats why i say, if you if you went by the book, if there was such a book and said, well, okay, this leads to this, this has been bizarre two months. Nothing has led to what its supposed to lead to. And, therefore, its difficult to guess. As i say, heaven for bid the geopolitical leaders of our adversaries may be looking and saying, is there anything we could do to confuse this even farther . It is going to be an interesting weekend. We have a muslim day of prayer today and a jewish day of prayer tomorrow. And the ground defensive looming and looming and looming. This is not going to be one that people are going to sleep comfortably through the weekend. Art, we may need to scrap the ice cubes this weekend and just drink it neat. Anyway, carl, i have two extra bottles. Before we let you go, if anybody wrote the book, it was you. Is there any tell in you for this market right now in terms of what the main thing youre going to watch over whether its with the markets closed this weekend or early next week . Certainly you want to stay above that 4200. When they broke 43, this was there. And i think what im going to watch is what does happen with that yield on the tenyear. Do they revisit and do they punch above it . If they punch above it, it might be like touching the third rail and you might get a response in the market. 4200 at worst case. And then 5 in the tenyear yield. Weve got a lot of touch pads around here and you want to be careful what youre touching. Art, thanks so much. Talk soon. My pleasure. Still ahead, breaking down the ozempic effect on one key sector and the key names wall street says could benefit here. Those details are next. We have the dow down 156. E ekowo ss f n tloesor thwe. Healthcare should evolve with you, and part of that evolution means choosing the right medicare plan for you. 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Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Plenty of commentary this quarter from executives about the ozempic effect, as Companies Like nestle and lifetime fitness look to cash in on the trend. Brendan gomez with more to watch in the fitness spector because identify heard from people on it, i dont have to go to the gym anymore. Its been buzzy conversation. Weve talked about some of the potential negative impact but the streets been positive on fitness names. Morgan stanley saying names like Lifetime Group, Planet Fitness plan to benefit. Evercore updated this week as one of the best consumer plays. Shares are up 5 or so. You see that pop in shares on tuesday. Other companies leaning in further. I spoke with the Lifetime Group president and coo about his plan to meet the demand hes hearing from some club members. Im in the process of embarking on a Pilot Program that does exactly that. For us to evaluate through the use and deployment of physicians, physician assistants, nurse practitioners, that would be on inhouse at lifetime and working in an integrated way with their primary care doctor, with our personal trainer, our registered dietitians, to create that comprehensive program. Working inhouse at lifetime. He added theyre only doing this, though, through extensive blood Panel Analysis and alongside fda requirements of increased physical activity. Speaking to your point, sara, this will not dip attendance to gyms. Its similar to what Weight Watchers has successfully done since acquiring Telehealth Company sequence in april. Connecting diet and fitness with weight loss drugs. In short, this isnt a sit on your couch and watch the pounds melt away miracle drug at the moment. The street remains bullish on names where consumers will most likely turn to maintain their weight loss journey. Yet another sector we have to watch with the development of these drugs. Thanks. Meantime, hbe shares turning negative on the year under this pressure on this disappointing outlook for cash flow and profits next year. Well break down the business in the next hour. This is Spring Semester at fairfieldsuisun unified. They switched to google tools for education because theres never been a reported Ransomware Attack on a chromebook. Now theyre focused on learning knowing that their data is secure. this thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. When you think of investment risk, do you consider climate risk . Changing weather patterns are impacting the way we live and the value of businesses large and small. This can mean disruption to supply chains, changing demand for products and shifting regulation. What does this mean for your business, your clients, and your investments . Ice offers data and markets that can provide critical insight. Manage your climate risk with ice. The strike of the uaw entering now its sixth week. Well get another update from Union President shawn fain in a few hours from now. We have phil lebeau with what i like to call the lebeau meter. Its dead on accurate. What do we know and where are things going from here . Its progressing. I know thats not an answer people want to hear. There was a headline that came out overnight from bloomberg that had people think were close to a settlement between General Motors and the uaw. There was a labrally yesterday in detroit. The head of the Gm Negotiating Committee basically said, were making progress with General Motors. All the pieces are there to put together. That doesnt mean theyre close to an agreement. Take that with a major grain of salt. Yes, they are making progress and theyre talking more. Uaw president shawn fain will be on facebook at 4 00. Losses and layoffs continue to grow. Stellantis adding another round of layoffs at toledo. They have laid off 1,500 workers since the beginning of the strike. Ford is feeling the most pain, according to jpmorgan, losing 44 million a week. For General Motors, the pain is a little less, but still there, 21 million a week. 4 00 is the update. Where is the lebeau meter now . Its not as pessimistic but its still not optimistic that we see a resolution. Hows that for dancing around . Thats all right. Youre allowed. Its across the board . Is gm ahead, so to speak . I dont know you would say ahead. They may be a little more advanced. Phil, thank you. 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The call is free, and theres no obligation. You know medicare wont cover all your medical costs. So, call now and see why a Medicare Supplement plan from a company like humana just might be the answer. Good friday morning. Im Carl Quintanilla with sara eisen on the floor of the new york stock exchange. Antonio neri is with us on heels of their investor day. The outlook on impact of a. I. And the cloud sector straight ahead. Are we overreacting to the ozempic effect . One analyst says we are and making some stocks very attractive. Hell join us to make the case. Solar edge getting crushed as preliminary results are being released. We kick it off as we always do with the markets. Stocks are moving slightly lower as the focus continues to be on bond yields. The tenyear crossing the key